Major Currencies Overview
First up, here’s a rundown of how the major pairs performed in the past week:
The Greenback sank to the bottom of the forex pile as the U.S. government and central bank unveiled historic stimulus measures, bringing a bit of risk appetite back to the table.
The non-farm payrolls report is due later in the week, along with ISM PMI readings, but the markets are likely to stay focused on COVID-19 updates and safe-haven demand. Read more.
The Loonie was also deep in the red last week as it caved to another round of crude oil declines and a surprise BOC rate cut.
There are no major reports from Canada this time so traders are likely to keep close tabs on oil price action, as well as major changes in market sentiment. Read more.
EUR & CHF
Both lower-yielding European currencies chalked up mixed runs as counter currency flows took over while the ECB and SNB announced big stimulus measures.
Only mid-tier preliminary economic reports are up for release from the euro zone while the Swiss calendar is empty, leaving their currencies sensitive to sentiment again. Read more.
Sterling finally recovered from weeks of being pounded, climbing to the top of the forex charts even as economic figures came in weaker than expected.
There’s not much in the way of major reports from the U.K. so the spotlight will likely be on how the government is handling the coronavirus outbreak in the country. Read more.
The safe-haven yen returned most of its previous gains as markets reacted positively to global stimulus efforts to battle the COVID-19 outbreak.
It’s all about mid-tier economic releases from Japan for the rest of the week, so yen pairs might take their cues from counter currency action or overall sentiment as usual. Read more.
The Aussie climbed to second place for the week as the higher-yielding commodity currency took advantage of risk-taking on account of stimulus packages being announced.
Only low-tier economic reports are due from the Land Down Under, so it’s likely that the Australian currency could once again react to risk flows. Read more.
The Kiwi also spent the week mostly in the green as traders were hungry for more risk while governments stepped up their efforts to combat the COVID-19 contagion.
Kiwi traders might take their cues from Chinese data, along with coronavirus-related updates and corresponding changes in overall sentiment. Read more.
Charts to Watch:
Breakout alert! This pair was previously stuck inside a rising wedge formation on its 1-hour chart but just recently busted to the upside to signal that a climb is due.If so, AUD/USD could be in for a rally that’s around the same height as the chart pattern, which spans roughly 500 pips. Price is pulling back to the broken wedge resistance for now, and this area could hold as support.
Just be careful when jumping in a long position, though, as stochastic is just starting to turn lower from the overbought zone. This suggests that sellers might still have enough energy to drag the pair back inside the wedge pattern.
Not a fan of the commodity currencies? Here’s a potential short opportunity on the Loonie for ya!
CAD/JPY has been pacing back and forth inside a 400-pip range with support at the 74.00 handle and resistance at 78.00. Price just recently bounced off the top of the range, so it might not be too late to catch the downside momentum back to the bottom.
Stochastic is already indicating oversold conditions while price tests the middle of the range, which appears to have held as an area of interest. If buyers return here, another test of resistance might be in the works.
Prefer waiting for retracements? If you’re patient enough to hold out for a potential pullback on USD/CAD, then this trend setup might be worth keeping tabs on.
The pair has formed lower highs and lower lows to create a descending channel on its 1-hour time frame, and price is just bouncing off the bottom. Using the handy-dandy Fib tool shows that the 61.8% level is right smack in line with the channel top and the 1.4300 major psychological mark where more sellers might be waiting.